“The housing crisis can’t be solved without urban land reform”

Cranes over London. Image: Getty.

While much has been said about the need to suspend or mitigate against the right to buy and its context in London, there is now growing attention on the dysfunctional role the current land trading system plays in London’s housing crisis.  

Southwark council has begun in earnest in the past few months the process of identifying and bidding for new development sites. Yet the extortionate asking prices offered on the open market mean any successful bids would make a significant hit on the viability of future schemes and impose a further burden on an already constrained budget for housing investment. 

As present, the valuation of land for viability testing purposes in the planning process is set against the existing use of the site. Independently of this, a free market for land races away, with the speculative premium off the back of changes in public policy and public investment in an area – the so-called hope value – fully priced in on potential development sites across our borough.

If councils could spend their money on building new homes rather than on deadweight land transactions, we could go much further in delivering the kinds of homes that residents actually need. For this reason Southwark, like other serious house-building councils, are calling on government to revise the 1961 Land Compensation Code to ensure that new land holdings can be secured on terms that reflect  the affordable nature of what we mean to build – affordable land for affordable housing.

To better document the scale of the problem, we have been developing a log of both real land transactions and existing use values (as used for viability testing) on sites allocated for housing development in our local plan, as part of an evidence base to help government assess the scale of the problem. Three recent hope value horror stories from Southwark illustrate the scale of the challenge:

1. A site in the centre of our borough, adjacent to land we own, became available to buy through a blind auction, and would have allowed us a more coherent development plot, meaning we could increase the number of council homes on this site from 80 to roughly 200. The existing use value was set at £1.5m, and after much internal discussion our surveyors put in a bid of £5.5m – a premium of around 14 council homes, which would have added around £50k cost per home.

The site eventually sold for £8.5m, meaning the council couldn’t develop itself. The winning bidder will likely be tempted to overdevelop the site with inappropriate height and massing (based on the experience of resident feedback on planning applications across the road), dilute affordable housing and infrastructure contributions, or simply leave it empty and undeveloped for many years until market conditions improve. 

2. A large site on the east of the borough near the proposed site of a new Bakerloo lines station had an estimated existing use value of around £5m. When the land owners put the site up for auction they offered a guide price of £25m, and then withdrew it on the basis they could achieve a higher price later on with more advantageous policy environment. 

3. Sites with recently consented permissions on Old Kent Rd, the focal point of a major regeneration in our borough, include 313-349 Ilderton Rd, whose viability assessment reported an existing use value of £1,853,250 . This site is now for sale at £15m. Similarly, the developer of 134-140 Ilderton Rd recently reported an existing use value of £2,539,500, and now seeks to sell for £10m. 

In each of these cases, density, land value and viability in a high demand area tug at one other, and the free open market for land reinforces a circularity – on which turns planning permissions and site allocations into any other kind of tradeable commodity, dissociated from the council’s imperative of meeting local housing needs, securing sums for social infrastructure and ensuring good growth.  

The demand for a different land compensation regime is not historically unusual: the 1941 Uthwatt report describes methods of community land value capture and the 1947 system of nationalised land use and developer betterment part-survives to this day. But the concept of compensation reform has only moved back in to the mainstream in recent months. 


The prominence given by the communities select committee’s study of land value capture, Conservative council leaders calling for radical caps on land speculator profits, and researchers and commentators like Daniel BentleyRose Grayston and Thomas Aubrey from different parts of the political spectrum, have all highlighted the perversities of the current land trading system. Oliver Letwin’s influential review of build out rates also goes part of the way to identifying the problem proposing caps on land compensation sums as a multiple of a site’s existing use but only for agricultural to residential contexts, squarely at odds with government’s housing policy goal of “fixing the broken housing market … [and] planning the right homes in the right places“ as captured in exacting housing supply targets and delivery tests in high value, high demand inner city boroughs like Southwark.

Until these inconsistencies are resolved, the government will continue to preside over a broken housing economy with a reluctance to address the fundamental drivers of our housing crisis. 

Southwark isn’t hanging around waiting for these changes – we are already developing the practical tools that would support such a reformed land trading and viability testing system, including  a Viability Benchmarking Model  that would standardise the data sources that inform cost value and yield figures that viability consultants manipulate to plead their client’s case. Further to this, we are also developing a prototype towards a standardised Land Value Register that reports live existing use values for sites allocated for residential development: this could be used to create either a formal cap for surveyors and developers in the land trading system, or better still, provide a basis for local authorities to support more rational land assembly for the purposes of affordable housing, either from itself or another builder.

Today, Dulwich and West Norwood MP Helen Hayes will begin the process of airing these arguments in the House of Commons and rallying a cross-party consensus around a new Planning (Affordable Housing and Compensation) Bill. The housing crisis cannot be solved without this long overdue land reform for cities, and our uncertain times demand this bold kind of thinking.

Leo Pollak is a Labour councillor for South Bermondsey in the London Borough of Southwark.

 
 
 
 

What Citymapper’s business plan tells us about the future of Smart Cities

Some buses. Image: David Howard/Wikimedia Commons.

In late September, transport planning app Citymapper announced that it had accumulated £22m in losses, nearly doubling its total loss since the start of 2019. 

Like Uber and Lyft, Citymapper survives on investment funding rounds, hoping to stay around long enough to secure a monopoly. Since the start of 2019, the firm’s main tool for establishing that monopoly has been the “Citymapper Pass”, an attempt to undercut Transport for London’s Oyster Card. 

The Pass was teased early in the year and then rolled out in the spring, promising unlimited travel in zones 1-2 for £31 a week – cheaper than the TfL rate of £35.10. In effect, that means Citymapper itself is paying the difference for users to ride in zones 1-2. The firm is basically subsidising its customers’ travel on TfL in the hopes of getting people hooked on its app. 

So what's the company’s gameplan? After a painful, two-year long attempt at a joint minibus and taxi service – known variously as Smartbus, SmartRide, and Ride – Citymapper killed off its plans at a bus fleet in July. Instead of brick and mortar, it’s taken a gamble on their mobile mapping service with Pass. It operates as a subscription-based prepaid mobile wallet, which is used in the app (or as a contactless card) and operates as a financial service through MasterCard. Crucially, the service offers fully integrated, unlimited travel, which gives the company vital information about how people are actually moving and travelling in the city.

“What Citymapper is doing is offering a door-to-door view of commuter journeys,” says King’s College London lecturer Jonathan Reades, who researches smart cities and the Oyster card. 

TfL can only glean so much data from your taps in and out, a fact which has been frustrating for smart city researchers studying transit data, as well as companies trying to make use of that data. “Neither Uber nor TfL know what you do once you leave their system. But Citymapper does, because it’s not tied to any one system and – because of geolocation and your search – it knows your real origin and destination.” 

In other words, linking ticketing directly with a mapping service means the company can get data not only about where riders hop on and off the tube, but also how they're planning their route, whether they follow that plan, and what their final destination is. The app is paying to discount users’ fares in order to gain more data.

Door-to-door destinations gives a lot more detailed information about a rider’s profile as well: “Citymapper can see that you’re also looking at high-profile restaurant as destinations, live in an address on a swanky street in Hammersmith, and regularly travel to the City.” Citymapper can gain insights into what kind of people are travelling, where they hang out, and how they cluster in transit systems. 

And on top of finding out data about how users move in a city, Citymapper is also gaining financial data about users through ticketing, which reflects a wider trend of tech companies entering into the financial services market – like Apple’s recent foray into the credit card business with Apple Card. Citymapper is willing to take a massive hit because the data related to how people actually travel, and how they spend their money, can do a lot more for them than help the company run a minibus service: by financialising its mapping service, it’s getting actual ticketing data that Google Maps doesn’t have, while simultaneously helping to build a routing platform that users never really have to leave


The integrated transit app, complete with ticket data, lets Citymapper get a sense of flows and transit corridors. As the Guardian points out, this gives Citymapper a lot of leverage to negotiate with smaller transit providers – scooter services, for example – who want to partner with it down the line. 

“You can start to look at ‘up-sell’ and ‘cross-sell’ opportunities,” explain Reades. “If they see that a particular journey or modal mix is attractive then they are in a position to act on that with their various mobility offerings or to sell that knowledge to others. 

“They might sell locational insights to retailers or network operators,” he goes on. “If you put a scooter bay here then we think that will be well-used since our data indicates X; or if you put a store here then you’ll be capturing more of that desirable scooter demographic.” With the rise of electric rideables, Citymapper can position itself as a platform operator that holds the key to user data – acting a lot like TfL, but for startup scooter companies and car-sharing companies.

The app’s origins tell us a lot about the direction of its monetisation strategy. Originally conceived as “Busmapper”, the app used publicly available transit data as the base for its own datasets, privileging transit data over Google Maps’ focus on walking and driving.  From there it was able to hone in on user data and extract that information to build a more efficient picture of the transit system. By collecting more data, it has better grounds for selling that for urban planning purposes, whether to government or elsewhere.

This kind of data-centred planning is what makes smart cities possible. It’s only become appealing to civic governments, Reades explains, since civic government has become more constrained by funding. “The reason its gaining traction with policy-makers is because the constraints of austerity mean that they’re trying to do more with less. They use data to measure more efficient services.”  

The question now is whether Citymapper’s plan to lure riders away from the Oyster card will be successful in the long term. Consolidated routing and ticketing data is likely only the first step. It may be too early to tell how it will affect public agencies like TfL – but right now Citymapper is establishing itself as a ticketing service - gaining valuable urban data, financialising its app, and running up those losses in the process.

When approached for comment, Citymapper claimed that Pass is not losing money but that it is a “growth startup which is developing its revenue streams”. The company stated that they have never sold data, but “regularly engage with transport authorities around the world to help improve open data and their systems”

Josh Gabert-Doyon tweets as @JoshGD.